Time to end no-bid API contract, examine long-term alternatives for hospital

The state failed again this week to explain why it chose to privatize the Alaska Psychiatric Institute with a no-bid contract that could be worth $225 million over five years.

This mishandled process is reason enough to halt the sudden drive to privatize with Wellpath Recovery Solutions.

It is one thing to call in temporary help to fix a problem at API for a few months, a situation for which a no-bid deal seems justified.

But contracting for long-term operation of the hospital with a no-bid deal is unjustified. It appears as if one of the goals here was to get hundreds of state employees off the payroll as soon as possible and hire a specific private entity to run the operation, regardless of alternatives.

Adam Crum, who has been named to be commissioner of the health department, needs to speak up and end this contract, which he signed off on in early February.

At a hearing Tuesday, the chief procurement officer of the state and the deputy commissioner of the Department of Health and Social Services could not give a rational explanation as to why competitive bidding was avoided.

That prompted a letter from five key House members to the state procurement officer asking to suspend the portion of the contract under which Wellpath would run the hospital for years to come.

The state should have taken note of the offer by Providence Hospital to run API and other organizations should have been considered, said Reps. Ivy Spohnholz, Tiffany Zulkosky, Zack Fields, Jonathan Kreiss Tomkins and Matt Claman.

”We urge you to halt work on Phase 2 privatization and require that any transition in management of API from the state to a private entity be offered in a competitive bidding process,” they said.

“We believe it is inappropriate and possibly illegal to structure procurement to avoid competition,” they said.

Albert Wall, the deputy commissioner of health and social services, said Tuesday that not sticking with Wellpath after the first phase of the contract would “destabilize” the hospital.

Why does he assume that Wellpath would not get the contract through a competitive process? And why would management of API under Wellpath be unable to hand it over to a new contractor without doing harm to patients?

The state’s answers on the stability claim are impossible to believe.

“Privatization has never been the point to me,” said Wall, adding that patient care is the goal.

In fact, the state has made it a point to get this hospital privatized with a specific company.

Wellpath, which is owned by the private equity firm H.I.G. Capital, was created last fall when Correctional Medical Group Companies acquired Correct Care Solutions. it has combined annual revenues of $1.5 billion and 15,000 employees who care for nearly 300,000 patients in about 40 states and Australia, the company says.

Dermot Cole3 Comments